Why Shopify Inventory Was Climbing Right now


What happened?

After a hard week at the end of April, Shopify (BUSINESS 2.57%) The stock rose today as investors looked at the company’s fourth-quarter earnings report and two analysts lowered their price targets but maintained ratings on the stock.

As of 11:51 a.m. ET, Shopify was up 2.5% after climbing as much as 5% earlier in the session. These gains were also notable because AmazonThe stock that Shopify dragged down last week after a weak earnings report slipped further today, falling 2.9% this morning.

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so what

Shopify’s stock plummeted as market sentiment continued to move away from high-growth tech stocks and Amazon launched its Buy with Prime initiative, which will allow any e-commerce company, including Shopify sellers, to buy to Amazon’s Prime customers Sell ​​and use Amazon’s logistics network. Shopify shares also fell late in the month as Amazon reported just 7% revenue growth in the first quarter, sending out a warning to the broader e-commerce industry.

Today, however, the market seemed to believe the sell-off was a buying opportunity, especially as the stock has fallen nearly 75% from its peak a few months ago.

Two analysts commented on Shopify’s upcoming report, which is expected later this week. KeyBanc Capital Markets analyst Josh Beck lowered his price target to $650 from $1,000 to reflect the sell-off but kept his rating at Overweight. Beck said e-commerce trends have been mixed in so far PayPal offers weak forecasts and Amazon reports a drop in first-time sales. Deutsche Bank‘s Bhavin Shah cut its price target to $550 from $900, maintaining a hold rating and saying he expects post-pandemic demand normalization to continue as Shopify reports earnings.

What now

As the stock rallies, the market seems to be saying it believes Shopify’s slowing growth is already priced into the stock. Analyst estimates also make it clear that the market continues to expect strong growth from the company. For the first quarter, consensus is for revenue of $1.59 billion, up 61% from the year-ago quarter, and earnings per share of $0.99, up from $2.01 a year ago.

Given the company’s strong revenue growth, the stock could easily continue to climb if it can hit those numbers.